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September 6, 2012

Palaveev Forms Team-Based Consulting Firm for Advisors

The Ensemble Practice will focus on small ensemble practices looking to build businesses

Philip Palaveev, the former Fusion Advisor Network CEO and Moss Adams consultant, announced Thursday the launch of a new consulting firm—The Ensemble Practice—that will focus on long-term engagements with advisory firms that have from $1 million to $5 milion in annual revenue that have already “experienced success in attracting clients” but are looking to become better organized, grow more quickly and become more profitable.

“We tend to believe that the future of the industry is best served by small ensemble practices,” said Palaveev (left) in a Wednesday interview, stressing that The Ensemble Practice’s approach will mirror that of its consulting clients: a team-based, long-term relationship.

“My experience has been that no longer how brilliant your recommendations are, improvements come from implementation,” Palaveev said. “Positive changes come from small incremental” steps, he continued. “We want to focus on an ongoing basis with our clients, not short-term consulting projects.”

When asked what sets The Ensemble Practice apart from the many other consultants in the advisor space, Palaveev said, “We're a team, not individuals; consultants need to work in teams—each brings different expertise.”

In addition to Palaveev, CEO, the principals at the new firm include Jonathan McQuade, “an expert on recruiting” who has worked with the broker-dealer National Financial Partners, and Victoria Godyn, who has expertise in marketing and spent quality time at Fusion and at Russell Investments.

(Palaveev and McQuade (right) are longtime contributors to Investment Advisor and AdvisorOne, and have provided analysis of AdvisorOne’s annual Top Wealth Managers survey for several years, including the 2012 Top Wealth Managers.)

The Ensemble Practice is not starting from scratch in terms of clients. In addition to “individual engagements, based on the needs of the owner, very customized”—though again, in teams—the firm will have what Palaveev calls “strategic relationships with select broker-dealers and custodians,” including National Financial Partners (NFP) and Fusion Advisor Network. Fusion, the firm founded by Stuart Silverman and formerly headed by Palaveev, was acquired by NFP in July.

While “the recipients of the services will be the advisory firm,” not individual advisors, “it makes so much sense to make sure the recommendations are tied to the operations of the broker-dealer,” Palaveev says. “Those BDs and custodians can become important accountability partners.”

The third source of clients will be the Ensemble Practice Institute, in which teams from larger advisory firms can attend in-person classes on strategic planning, compensation, career path structures, financial management and business development over a period of three to four years. Palaveev (left) says the Institute will launch in January in Denver, and will take advantage of advisors’ tendency to learn from one another as much as from the world-class experts who will be teaching at the Institute. That peer-to-peer learning, Palaveev says disarmingly, “outweighs anything I can say in a Bulgarian accent.”

There’s another area of expertise that The Ensemble Practice will offer: help with firms acquiring or merging with others. “in the past year, we’ve worked with seven firms in the middle of a merger,” Palaveev says.

While most advisory firms “haven’t seen what a big firm would look like, we have that knowledge and vision,” he says, estimating that he and his partners have already done consulting work with close to 5,000 firms over the years. “We’ve literally written the book” as well on how to systematically build an ensemble practice, Palaveev points out, referring to his book, "The Ensemble Practice," which is being published Oct. 2 by Bloomberg. Advisory firm owners, by contrast, are “business owners for the first time and probably the last,” he says.

But aren’t there already plenty of consultants to advisors? “I believe we can’t have enough high quality experts for an industry that’s changing and growing," Palaveev said. "All of us are engaged in searching for the sustainable business model of the industry. There are a lot of doctors in town, that’s good.”

The Ensemble Practice will also take a unique approach to its own compensation. “Our fees are tied to the results—in growth, in clients—we’ll be taking the same risk our clients will be making. If those goals aren’t meant, we give up part of our fee.” That’s only fair, Palaveev says, since “if we’re asking advisors to invest in their business, we should as well.”

Using one of his trademark analogies, Palaveev says that "most chefs don’t need to be taught how to cook, but how to manage a restaurant." Referring to advisors, he says "most of these cooks haven’t managed a restaurant before, but it’s a lifetime commitment—we can put them together with people who’ve already been there; Jonathan [McQuade] and I have been to a lot of restaurants—we witnessed the process again and again to see what works."

Based in Seattle but with a national footprint, Palaveev says his new firm moreover recognizes that there is “no such thing as an optimal business model. Every business is unique.”

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